Reform of the French Social Housing Sector

The State of Play

The launch of a new housing strategy by the French government in September 2017 triggered a showdown with the social housing providers. Virginie Toussain, Union Sociale pour l' Habitat (USH) EU Delegation Legal Adviser presents the current state of play.

One of the most important measures of the new strategy has already been introduced in the budget proposal law; 1.5 billion Euros will be cut from the housing allowances for social housing tenants, a sum that equals to around 60 euros per month per household.

To counteract the impact of this budgetary decision for the already disadvantaged households, the government is asking social housing providers (USH member organisations) to reduce their rent of the same amount. This should cost the sector around 2 billion Euros.

The housing allowances are a key element of the economic model of social housing provision in France, as far as rent constitutes the revenue of the activity and is fixed by law depending on the type of dwelling built, which in turn is set following the type of loan contracted.

This measure was not discussed with the HLM movement or even just presented during the presidential election campaign.

USH made an impact assessment of this change within its members. The cuts will mean:

Loss of 75% of their capacity to invest

Risk of bankruptcy for 200 social housing providers

Decrease of construction and rehabilitation of social dwellings

Impact on employment in the construction sector

Less investment for tenants, already facing social exclusion

Increase of the territorial divide and risk for urban regeneration

The dialogue with the national authorities is not simple and USH put in place different tools to raise the awareness of the general public but also to have an evidence-based communication strategy:

This reform proposal loads negatively the relationship between the government and the social housing providers but also with the housing market actors in general. Local authorities, tenants’ associations, trade unions and the construction federation have expressed their support to the social housing sector in this struggle. A collective has been put in place to defend the housing allowances system for all tenants.

The government put forward some proposals to compensate this loss, which were considered insufficient to address the challenge of the increasing housing needs. Following the National Assembly, the budgetary law was presented to the Senate where local authorities made the case against the reform. USH shared its proposals with the senators aiming to find a solution compatible with the objective of the reduction of public expenditure, being a responsible partner, while defending the investment capacity of the social housing providers.

The budgetary proposal is still processed by the French Parliament, a procedure that should be completed in the beginning of 2018 with a Housing Act. The French Senate came up with a proposal for a so-called ‘Consensus Conference’ with all stakeholders involved to find solutions. President Macron agreed in principle. The story goes on...